Judge backs Halifax in Chip and PIN clone case

Phantom withdrawal verdict may go to appeal

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Halifax, the UK retail bank, has scored a victory in a closely-watched 'phantom withdrawal' case that put the security of Chip and PIN on trial.

Halifax customer Alain Job sued the bank after he was held liable for making eight disputed cash machine withdrawals from his account. Job was left £2,100 out of pocket from the series of withdrawals in February 2006 and launched a lawsuit after failing to obtain a refund from the bank, or through arbitration.

Cases over "phantom withdrawals", where money is withdrawn from bank ATMs without the card holder's permission and where card details have not being divulged to third parties, are commonplace, even in the UK.

Fraudulent withdrawal of money in UK accounts using cash machines outside the UK are a growing problem. These default to reading details from easy to forge magnetic stripes, which Chip and PIN cards still contain.

But Chip and PIN was supposed to stop the use of cloned cards, at least in UK ATMs. Chip and PIN is the UK's iteration of the global EMV standard for chip-based payment cards and acceptance devices, including point of sale terminals and ATMs.

Job's case involved disputed withdrawals involving a Chip and PIN card and UK's cash machines that would have read it. Because of this, the case is the first to test UK bank's assurances over the security and integrity of Chip and PIN in court.

At a one-day hearing in April at Nottingham County Court, Job and his legal team argued his ATM card might have been cloned and used to withdraw funds without any negligence on his part. Halifax offered evidence from computer printouts of log files to support its argument that Job's real card (and associated microchip) was used to authorise the disputed transactions.

A judge found in favour of Halifax and dismissed the lawsuit in a ruling issued on Thursday, Finextra reports.

Job's barrister, Stephen Mason, told IDG that Halifax had junked evidence that might have ascertained if a cloned card was used. The original ATM card and the Authorisation Request Cryptogram were destroyed by Halifax.

Job, who faces legal bills of up to £50,000, is considering an appeal. ®